Plans to replace Britain's ageing fleet of intercity trains are in jeopardy after the Department for Transport admitted that a decision on whether to fund the £7.5bn programme will be made at the time of the coalition government's spending review in October.

With government departments having to come up with plans to slash as much as 40% of their budgets ahead of the review, there is increasing fear that the government will scrap the Intercity Express Programme (IEP). That would leave rail travellers with the prospect of having to continue to use outdated trains, some of which date back to the 1970s.

The IEP is supposed to provide new high-speed trains – replacing the old Intercity 125s – for the east coast and Great Western lines.

Agility Trains, a consortium including John Laing, Hitachi and Barclays, was named preferred bidder for the contract to create the trains more than a year ago. The scheme had already been deferred by the previous government until after the election and has been independently scrutinised by Sir Andrew Foster. His report, published today, recommends a period of reflection to consider the alternatives to IEP.

Now the Department for Transport has said the decision will be made in October.

"As expenditure on all rail projects will be reassessed as part of the spending review, the government believes that it would be irresponsible to make a decision on IEP in isolation at this time, particularly given the interdependencies between IEP and other major rail investments," the DfT said. "Over the past four months, the IEP has been independently reviewed by Sir Andrew Foster, and the department is publishing his report today. His report recommends a period of reflection to consider the alternatives to IEP.

"The government therefore proposes to use the period up until the spending review to give further consideration to the alternatives to IEP."